Moody's upgrade of Ireland's economic outlook from "stable" to "positive" has been described as a favourable endorsement of the country's fiscal position, but not one that should be overstated.
The credit ratings agency reaffirmed the country's Aa3 rating, which means Ireland maintains its position at the fourth-highest level of Moody's scale, three notches below the top Aaa rating.
Economist Simon Barry said the upgrade was based on the prospect of sustained further improvement on the fiscal position, and one of the key factors was the reduction in Ireland's debt burden and the associated improvement in debt affordability.
"It's a favourable endorsement of Ireland's fiscal position, but it would be wrong to overstate it, in the sense that professional investors that are making decisions on how to invest and where to invest do use the outputs from ratings agencies but they also do their own analysis so there is a much wider picture out there," he said.
During the financial crash, downgrades by credit ratings agencies like Moody's made headline news and was often market moving, particulary when Ireland's rating plummetted to junk status.
"Now we're in a totally different position," Mr Barry said, "which means that Ireland's rating is judged to be of high quality and subject to low credit risk.
"It's favourable to have an external endorsement like this. It also does help the National Treasury Management Agency and their management of Ireland's debt and their ability to sell bonds."
Finance Minister Jack Chambers welcomed the upgrade, though he did acknowledge that Ireland continues to be exposed to volatile and unpredictable windfall corporation tax.
Ten years ago, corporation tax receipts were around €4.5 billion and this year it looks like they might be on track for €28 billion. Mr Barry said, as problems go, "it's about as high quality as one can get".
"But it does bring challenges and opportunities to use these extraordinary tax receipts to plan for the future, and the Future Ireland Fund and the Infrastructure Fund are very welcome developments, and they were cited by Moody's as something that's giving them additional comfort and confidence in the outlook from here," he said.
